Correlation Between Quality Houses and AIM Commercial
Can any of the company-specific risk be diversified away by investing in both Quality Houses and AIM Commercial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Quality Houses and AIM Commercial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quality Houses Property and AIM Commercial Growth, you can compare the effects of market volatilities on Quality Houses and AIM Commercial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Quality Houses with a short position of AIM Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quality Houses and AIM Commercial.
Diversification Opportunities for Quality Houses and AIM Commercial
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Quality and AIM is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Quality Houses Property and AIM Commercial Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIM Commercial Growth and Quality Houses is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Quality Houses Property are associated (or correlated) with AIM Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIM Commercial Growth has no effect on the direction of Quality Houses i.e., Quality Houses and AIM Commercial go up and down completely randomly.
Pair Corralation between Quality Houses and AIM Commercial
Assuming the 90 days trading horizon Quality Houses Property is expected to under-perform the AIM Commercial. But the fund apears to be less risky and, when comparing its historical volatility, Quality Houses Property is 1.33 times less risky than AIM Commercial. The fund trades about -0.31 of its potential returns per unit of risk. The AIM Commercial Growth is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest 321.00 in AIM Commercial Growth on September 5, 2024 and sell it today you would lose (17.00) from holding AIM Commercial Growth or give up 5.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Quality Houses Property vs. AIM Commercial Growth
Performance |
| Timeline |
| Quality Houses Property |
| AIM Commercial Growth |
Quality Houses and AIM Commercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quality Houses and AIM Commercial
The main advantage of trading using opposite Quality Houses and AIM Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quality Houses position performs unexpectedly, AIM Commercial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in AIM Commercial will offset losses from the drop in AIM Commercial's long position.| Quality Houses vs. Quality Houses Hotel | Quality Houses vs. LH Shopping Centers | Quality Houses vs. LH Hotel Leasehold | Quality Houses vs. Future Park Leasehold |
| AIM Commercial vs. AIM Industrial Growth | AIM Commercial vs. Amata Summit Growth | AIM Commercial vs. Quality Houses Property | AIM Commercial vs. Ally Leasehold Real |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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